The Obama administration has proposed the creation of a new agency, a Consumer Financial Protection Agency (CFPA). This could be a great thing, if it actually results in an agency that takes consumer protection seriously and has the power to do it. It could also be disastrous, if the new agency just inherits the existing dysfunctional culture and weak rules and only part of the power of the existing regulators.  Here are NPA’s recommendations for an effective CFPA:

1. Do Not Separate CRA Examinations from CRA Enforcement The CFPA must have explicit authority to stop or delay any financial institutions application for merger, expansion or branch closure. The denial of such an application should be an automatic outcome if the institution receives a CRA grade below Satisfactory.

2. Have CRA Cover All Lending, Not Just Depository Institution Lending

3. Ensure that CFPA Focus Remains on Making Credit Available, Not Just Stamping Out Bad Products and Practices

4. Fund The CFPA through Fees on Financial Institutions Do not leave the funding of CFPA open to political manipulation through the appropriations or to the instability and potential conflict of interest problems of transaction fees.

5. Ensure That On-The-Ground Community Voices Are at the Table CFPA’s Board should have a seat reserved for a community-based group. The proposed Advisory Council should have specific authority to review proposed Agency actions and plans before they are implemented.

6. Retrain CRA Examination Staff to Ensure a Culture of True Enforcement

7. Make Data Publicly Available and Publicly Usable.  The CFPA should expand the fields currently collected under HMDA, establish a public loan modification database and ensure that all data is released in a timely and user-friendly fashion.

Ten percent of the homes in Richmond, California are foreclosed. One in ten. Home values have dropped 70%. The statistics don’t prepare you for the reality; on some blocks there are more boarded-up, empty houses than homes – on some, nothing but. Nor does it prepare you for the pain of those victimized by predatory mortgages. Berenice Ramos has already lost her home, but she’s continuing to fight for others in her community. She’s a leader of CCISCO- Contra Costa Interfaith Supporting Community Organizing, a PICO affiliate.

Berenice and CCISCO are doing amazing work to address the issue, winning an ordinance that fines banks $1,000 per day for poorly maintained properties, and pushing the city and county to pull their money out of banks that are not modifying bad loans.

CCISCO’s leaders are real experts on the foreclosure crisis because they deal with its real consequences every day. Yesterday they were able to make a compelling case to officers of the Federal Reserve, one of the main regulators of the banking system. It was the first of ten public meetings that will happen this summer as the result of the commitment Ben Bernanke made when NPA met with him in March.

200 people came, and CCISCO essentially asked for five things:
Help pushing lenders to modify bad mortgages; measures to keep the tenants of foreclosed buildings in their homes; policies that compel banks to fix their own mess by making quality, stable, affordable credit available to all communities without discrimination; greater transparency in mortgage lending so that communities and government can better hold lenders accountable for peddling bad financial products; and a follow-up meeting with Ben Bernanke after the conclusion of the ten forums.

The Richmond meeting was a big step toward making the case for systemic changes that will benefit our communities, but moving the Fed will take time. The national campaign should result in local victories, and the biggest win of the day was a commitment from Preston DuFauchard, Commissioner of the California Department of Corporations. CCISCO has won a 90-day moratorium on foreclosures starting July 1, and the Commissioner committed to prosecute banks who do not abide by the moratorium.

Here is some news coverage of the event.

Last Week, 40 leaders and staff from the PICO National Network and National People’s Action came together in Chicago. Representatives from California, Kansas, Missouri, Illinois, Massachusetts, New York, Iowa and Ohio joined hands to strengthen relationships and develop joint strategies to hold banks accountable.

We shared stories of our successes and struggles, and all of us came away with new ideas for local organizing to keep families in their homes and make affordable credit available in our communities. Our shared aim is to take the best local organizing, model it and amplify it across the country.

We looked at potential national campaigns and narrowed it down to two major, complementary components. A legislative and regulatory campaign will create rules that force the financial industry to make responsible, long-term investments in our communities. A corporate campaign will make an example of one of the industry’s worst predatory lenders and put an end to their discriminatory practices. Rickie Coleman from Sunflower Community Action in Wichita said, ‘This is about a real economic recovery in our communities.’

PICO is a network of 52 community organizations in 17 states. Since 1972, they have been doing some of the most innovative and effective community organizing. They are a great group and we are proud to be working with them. Together, our networks will be organizing in 25 states.

This historic partnership between two major organizing networks was prompted by a simple understanding by both parties: we can’t do this alone. No single organization is powerful enough to take on the financial industry, and the housing crisis in our communities is too urgent to let the traditional divisions between networks stand in our way. There is no time to lose.

National People’s Action stood with Senator Durbin, Albany Park Neighborhood Council, and others in support of the Financial Products Safety Commission at a press conference in Chicago earlier this week.

Sen. Durbin and NPA members, May 2009

At the foundation of our economic crisis are dangerous lending products that were allowed to infect our communities and our economy like a virus. Just as there are agencies to ensure food and medicine are safe, we need to be certain that we have a safe and monitored financial services sector. This action is long overdue. Read more.

On Thursday we were dealt a blow by the financial industry lobby; the Helping Families Save Their Homes Act was defeated in the Senate 45-51.  This legislation was part of President Obama’s housing plan, and would have allowed bankruptcy judges to modify mortgage terms as a last resort for distressed homeowners.

No Republicans voted in favor and twelve Democrats voted against: Byrd (VA); Johnson (SD); Baucus (MT); Tester (MT); Ben Nelson (NE); Dorgan (ND); Specter (PA), may as well stay R); Bennett (CO); Lincoln (AR); Pryor (AR); Carper (DE); Landrieu (LA).

Excuses varied, but the analysis seems to be that Dems who voted “No” had one of two things in common: States with relatively low foreclosure rates, or lots of campaign contributions from the financial industry.  Even after bringing us to the brink of a depression the banking industry is still being rewarded, and an estimated 1.7 million families stand to lose their homes as a result of this legislation not passing.   Americans should be spitting mad.

This video gives a glimpse at how they out-organized us this round:

Homeowners will negotiate for support on the Senate version of the Helping Families Save Their Homes Act. The House version of the bill passed in January. The meeting was arranged after 600 people took over the lobby and offices of the ABA on March 23rd.

NPA outside ABA office, Mar 2009

The protest was in response to the ABA’s unwillingness to support common sense bankruptcy reform to allow families with just one home the same bankruptcy protection as those that own more than one home. Read more.

Check this out:

subPrimer, a TAPwire blog, will provide critical context on the subprime/mortgage crisis and rapidly declining conditions in global financial markets, with a special focus on Wall Street’s role in bringing about these circumstances. The site will also offer introductory discussions of important issues in the subprime market and financial markets in general.

This website was started as a way to update Wall Street and the Making of the Subprime Disaster (html version here), a report issued by NTIC, Northwest Bronx Community and Clergy Coalition, and PUSH Buffalo in late November 2007 as part of their campaign to make Wall Street pay for subprime.

A NY Times editorial calls for more forceful steps than the Hope Now Initiatives.  NTIC is calling on the industry to modify loans into permanently affordable rates, not something that only lasts for a month.

http://www.nytimes.com/2008/02/13/opinion/13wed2.html?_r=1&hp&st=cse&sq=project+lifeline&scp=3&oref=slogin

Project Lifeline announced today.  A program that six large lenders are announcing that will help delinquent borrowers.

http://www.nytimes.com/2008/02/12/business/13lend-web.html?_r=1&hp&oref=slogin